Last week, the Fifth Circuit affirmed without opinion a 2016 federal district court ruling out of Dallas granting summary judgment that injury claims were covered under a liability policy. Klein v. Federal Ins. Co., --- Fed.Appx. ----, 2018 WL 1284459 (5th Cir. Mar. 12, 2018) involved a class action brought by patients who had been administered an IV Vitamin E solution (“E-Ferol”) while they were premature infants. The defendants in the class-action suit were Revco (Federal's named insured) and Carter-Glogau (a subsidiary of Revco who was an insured by definition, but not a named insured). Federal refused to contribute its $15 million limit to help fund a $110 million settlement of the class action suit, and as a result, Revco and Carter-Glogau assigned their claims to the class action plaintiffs, who then brought this coverage suit against Federal.

In 2016, the district court granted summary judgment in favor of the plaintiffs, determining there was some evidence that all E-Ferol recipients, even those who were asymptomatic, were injured at the cellular level at the time the E-Ferol was administered, and thus the claims of the asymptomatic patients were “bodily injury” even though they had no physical manifestation of disease. The court relied heavily on asbestos cases to conclude that subclinical tissue damage is a “bodily injury” even though it occurs at the cellular level and has not yet resulted in any observable manifestation of disease.

The court also concluded (a) the policy's Separation of Insureds clause meant that the allegedly intentional conduct of Carter-Glogau could not be imputed to Revco, who was alleged to be merely negligent, and (b) the sale of Carter-Glogau's assets did not hinder Revco's ability to seek coverage under the policy because Carter-Glogau was not the owner of the policy and could not alienate Revco's rights in the policy when it transferred its own assets and rights to a third party.

The Fifth Circuit, apparently finding all of the district court's reasoning in 2016 to be sound, affirmed the ruling without additional comment, lauding the district court's "thorough" opinion.

Unless otherwise indicated, lawyers listed on this website are not certified by the Texas Board of Legal Specialization. Prior results do not guarantee a similar outcome and depend on the facts of each matter. Under the rules of certain jurisdictions, this communication may constitute Attorney Advertising.